NOP Construction

Income Statement (in $ millions)

Item	Amount
Sales Revenue	16,000
Cost of Sales	11,000
Gross Profit	5,000
Operating Expenses	3,700
Operating Profit	1,300
Interest Expenses	400
Income Tax Expense	300
Net Income	600

Balance Sheet (in $ millions)

Assets

• Current Assets
  • Cash: 500
  • Accounts Receivable: 2,500
  • Inventory: 2,500
  • Total Current Assets: 5,500
• Long-Term Assets
  • Property, Plant & Equipment (net): 5,000
  • Other Assets: 4,500
  • Total Long-Term Assets: 9,500
• Total Assets: 15,000

Liabilities and Equity

• Current Liabilities
  • Trade Creditors: 2,000
  • Short-Term Bank Loans: 1,500
  • Total Current Liabilities: 3,500
• Long-Term Liabilities
  • Long-Term Debt: 7,500
  • Other Liabilities: 2,000
  • Total Long-Term Liabilities: 9,500
• Total Liabilities: 13,000
• Equity
  • Common Shares: 1,000
  • Retained Earnings: 1,000
  • Total Equity: 2,000
• Total Liabilities and Equity: 15,000

Required:

1. Calculate the operating profit margin and net profit margin for NOP Construction.
2. Determine the company's current ratio and quick ratio.
3. Assess the company’s financial leverage using the debt-to-equity ratio.
4. NOP Construction plans to invest in a new project requiring $5,000,000. Suggest a financing strategy for this project.
5. Recommend strategies to reduce the company's cost of sales and improve net income.